Bank of Baroda Q4 Results Review - PAT Boosted By Strong Business Growth, NIM Improvement: Nirmal Bang

Nirmal Bang Report

Bank of Baroda’s Q4 FY24 net interest income/pre-provision operating profit/profit after tax came in at a variation of 2.2%/3.6%/5.5% versus our estimates while PAT came in at a variation of 19.9% versus consensus estimate. PAT grew by 2.3% YoY/6.7% QoQ on the back of 12.5%/10.2% YoY growth in advances/deposits, 17 bps QoQ improvement in net interest margin to 3.27% and 8.4% YoY decline in provisions.

Current account and savings account ratio improved to 41.33% from 40.69% in Q3 FY24. NIM (excluding the one-off impact of recoveries) stood at 3.15%, which was within the guided range. Expenses for retirals stood at Rs 8 billion, partly due to lower bond yields, which according to the bank is a one off impact and should not be there in the coming quarters. PAR (SMA + Restructured Book) improved from 2.04% in FY23 to 0.92% in FY24.

FY25 guidance on key parameters: Loan growth – 12-14% with focus on RAM; deposit growth – 10-12% with focus on CASA/Retail TD; NIM at 3.15% +/- 5bps (which the bank will revisit based on evolving trends); Slippage ratio – 1-1.25%; credit cost - <1% and RoA – 1.1%.

The project financing guidelines by the RBI are still in consultation stage and the bank sees limited impact of 10bps on credit cost from of the same.

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